15-Year vs 30-Year Mortgage: Which Saves You More?

The core trade-off

A 15-year mortgage costs more each month but saves you a staggering amount in interest over the life of the loan. On a $300,000 mortgage at 6%, the 15-year option saves $191,832 — that’s nearly two-thirds of the original loan amount.

The catch: your monthly payment is $733 higher. That’s money you can’t invest, spend, or keep as an emergency buffer.

When the 15-year mortgage wins

The 15-year is the better choice when:

• Your monthly payment (including taxes and insurance) stays below 28% of gross income
• You already have a 6-month emergency fund
• You don’t have higher-interest debt (credit cards, student loans above 6%)
• You value the guaranteed return of avoided interest over market returns

The interest savings are risk-free. No investment can guarantee you’ll earn $191,832 — but choosing the shorter term guarantees you won’t pay it.

When the 30-year mortgage wins

The 30-year makes more sense when:

• The 15-year payment would exceed 28% of gross income
• You want to invest the difference (historically, markets return 7-10% annually)
• You’re early in your career with rising income ahead
• You need flexibility for other goals (starting a business, education costs)

The mathematical argument: if your mortgage rate is 6% and you invest the $733 monthly difference at 8% average returns, you’d have roughly $271,000 after 15 years — more than the interest savings. But that requires discipline and assumes strong market returns, which aren’t guaranteed.

Can you even qualify?

Before weighing strategy, check whether the 15-year is on the table at all. Lenders generally cap your housing payment — principal, interest, taxes, and insurance — at about 28% of gross income. On the same $300,000 loan at 6%:

	15-year	30-year
Principal & interest	$2,532/mo	$1,799/mo
With ~$600 taxes & insurance	$3,132/mo	$2,399/mo
Minimum income at 28%	~$134,000	~$103,000

The 15-year demands roughly $31,000 more household income to qualify for the identical house. For many buyers this isn’t a strategy question — the 30-year is the only term the lender will approve.

The hidden factor: opportunity cost

Most comparisons stop at the monthly payment difference. But consider what happens after year 15: the 15-year borrower now has no mortgage payment and can invest the full $2,532/month. Over the next 15 years at 8%, that grows to roughly $877,000.

The 30-year borrower, meanwhile, still has payments until year 30 and has been investing only $733/month.

When you run the full 30-year comparison, the 15-year borrower often comes out ahead even accounting for investment returns — because they have 15 years of investing with no mortgage.

What most people actually do

About 90% of borrowers choose the 30-year. The flexibility is appealing, and most people aren’t disciplined enough to invest the difference every month. If you’d spend the savings rather than invest them, the 30-year gives you less total wealth.

The best compromise: take the 30-year for flexibility, but make extra payments when you can. You get the safety net of lower required payments with the option to accelerate.

Know what that flexibility costs, though. The 15-year typically comes with a rate around 0.5% lower — say 5.5% ($2,451/month, $141,225 total interest) against 6% on the 30-year. Send that same $2,451 a month ($652 above the required payment) to the 30-year loan and you’re debt-free in 15 years 10 months, having paid about $165,200 in interest — roughly $24,000 more than the true 15-year. Prepaying gets you most of the way there, but the rate premium never goes away.